Second generation speaks

Young CFEs follow fraud examination trailblazers, part 2

November/December 2013

Dick Carozza, CFE

The ACFE began in 1988 with a small group that needed training and materials, which would teach them to catch fraudsters and deter future bad behavior. Twenty-five years later, the movement that Dr. Joseph T. Wells, CFE, CPA, James T. Ratley, CFE, and many others began is still expanding around the globe because the early CFEs taught their apprentices well.

In this article, we hear from 13 more young CFEs early in their careers as they apply anti-fraud knowledge from the ACFE, higher-education programs (most of which didn’t exist in the ’80s) and their ACFE-trained mentors. (Read part 1 here.)

ABOUT THE PARTICIPANTS

As the ACFE begins celebrating its 25th anniversary, we thought it would be good to look to the future. So, we asked numerous senior CFEs in many different industries and fields to send us the names of young, promising CFEs in their 20s and 30s who are beginning to make a mark in the fraud examination profession. They supplied us with 41 prospects, and 27 responded to our questionnaire. We’ve distilled the answers into a two-part article; part 1 was in the September/October issue. (We regret that we couldn't include all of their quotes.)

We realize that these 27 individuals don’t accurately represent all young CFEs (though they do show some of the great diversity in the ACFE). Fraud Magazine will profile other young members from around the globe in future issues. However, their views might give you a picture of the face of the fraud examination profession in the next quarter century. We believe we’ll be in good hands.

ADVICE FOR PROSPECTIVE FRAUD EXAMINERS

The second generation, of course, begets the third. This group of young CFEs is already training budding fraud examiners.

“If you want to help solve crimes and keep the bad guys off the street, but you don’t want to carry a gun, and you like accounting, then fraud examination is the job for you,” says Christopher Lee, CFE, forensic accountant with the U.S. Department of Justice. “It’s a rewarding profession, and every case has a twist. It keeps you on your toes and is always exciting.”

Though cases can be exciting, many young CFEs say that good fraud examiners are a rare breed. “Be certain that you are comfortable interviewing people and asking the tough questions,” says Jeff Windham, J.D., CFE, senior forensic analyst and general counsel with Forensic Strategic Solutions, Inc., “even when people are older than you or ‘high on the totem pole.’ Be even more certain that you can ask those questions in a respectful manner.”

Ryan Hubbs, CFE, CIA, CCSA, PHR, forensic audit manager at Halliburton, says, “For some, the work can be exciting and rewarding; for others, it may be overly confrontational and stressful. ‘Know yourself,’ and choose the career path that will be the most rewarding to your personal characteristics and skill sets.”

“I met many of my co-workers and managers before I came to work at my firm,” Malcom says. “Speaking with them, learning about the industry and discussing what my day-to-day job duties would look like confirmed to me that fraud examination was something I actually wanted to do and not just a passing interest.”

Paul Drew Scown II, CFE, a special agent with the FBI, is direct. “Learn how to talk to people,” he says. “Interviewing skills — in addition to knowing how to analyze financials — is a key to any good fraud examination.”

Aaron Kahler, CFE, CAMS, director of anti-money laundering compliance services at Capgemini, says those considering a fraud examination profession should associate with like-minded professionals. “The people you meet and work with now will become an influential part of your personal and professional lives,” Kahler says. “We are lucky to have some of the most dedicated and good-natured —with a healthy dose of professional suspicion — people in the fraud examiner field.”

And don’t be daunted by paying your dues; you won’t always sing the blues. “At first, it took a while for me to receive my first case,” says Michael Schaefer, CFE, CPA, audit supervisor at Boulay. “I was new and inexperienced, and our firm was the new player in town. I was frustrated and almost wanted to give it up after the first year. Once I got that first case, it was a huge relief.

“I quickly learned that investigations are not a repeat business, and you have to get out there every day, market yourself and meet people. Eventually those contacts will pay off and you will start to become a well-known investigator,” Schaefer says.

Brian Willingham, CFE, president of Diligentia Group, sums it up with some basic advice. “There are no shortcuts to experience; you need to learn by doing,” Willingham says. “No amount of wisdom will take the place of experience and plain old hard work. If you want to get noticed, do great work. Then do it over and over again.”

DETER THAT FRAUD BEFORE IT BEGINS

What is the ACFE’s foundation? Prevention and deterrence, of course. You’ve heard that before, and so have these CFEs. But how do we do it? To roughly paraphrase Hamlet, therein lies the truth.

“I still find that most companies seem to prefer to react to instances of fraud instead of take preventative measures,” says Pamela Wickes, CFE, CPA, CFF, ABV, director of forensic accounting services for Teal Becker & Chiaramonte CPAs PC. “However, I have seen more fraud awareness in companies lately and more concern of adequate segregation of duties.

“It all boils down to the perception of detection,” Wickes says. “If the tone at the top of a company indicates that fraudulent activity is absolutely unacceptable, and an employee feels like the eye in the sky is always watching, I think a potential fraudster would be deterred from committing a fraud. We have to continue to raise awareness within the business community about establishing adequate anti-fraud programs in their companies. We have to help companies understand that prevention is the most cost-effective way to go,” she says.

“Additionally, I always find the employees who worked with a fraudster were shocked that they or the company they worked for was a victim of a fraud scheme. They describe circumstances surrounding the incident to me that I recognize as red flags; unfortunately they did not. We have to continue to raise awareness of red flags to reduce the duration of the fraud schemes,” Wickes says.

Joshua Shilts, CFE, CPA, CFF, CGMA, director – forensic audit for Citizens Property Insurance Corporation, says he “absolutely” has seen improvement among organizations in finding new ways to deter fraud. “In two recent positions I have held, the focus has been on the proactive mitigation of fraud risk,” Shilts says.

“The organizations used data analytic and audit activities to specifically root out fraud. The recent interest in compliance and ethics has helped foster the employment of fraud examiners and forensic accountants to audit, investigate and enhance governance activities,” Shilts says.

Stephanie Wall, CFE, forensic auditor with the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, says anti-fraud controls can only go so far. “While it’s important to be aware and mitigate temptation and risk with controls wherever feasible, it’s equally important to foster a work environment of trust and integrity,” Wall says. “This is a tone that must be set at the top and developed with time and actions and therefore is much more difficult to implement, especially in a society that often focuses on quick fixes over lasting results.”

Schaefer says that he hasn’t seen much improvement among organizations in finding new ways to deter fraud. “Many of the organizations I work with don’t devote a significant amount of time to detect fraud,” he says. “Rather they focus their time and resources building and expanding the business despite the alarming statistics that fraud is a problem. Often, after a fraud occurs, I hear from them. ‘How could this happen to our business? I trusted my employees.’

“I do have one company I work with at least once a year that has taken a proactive approach. Several years ago they were a victim of a large fraud, and after this fraud came to light, they elected to be proactive about fraud prevention and detection. I spend about two days once or twice a year looking over their internal controls, testing select areas and providing recommendations for improvement,” Schaefer says.